# The CO2 Certificates

### What is a CO2 certificate?

The Kyoto Protocol, which came into force in 2005, is the first binding global treaty. It was decided to curb climate change. It defined the permitted amount of CO2 emissions and stipulated that CO2 may only be emitted with an authorization in the form of emission rights.

CO2 certificates stand for emission-reducing measures that include a calculated compensation of CO2 emissions for 1 ton of CO2 per certificate. This is achieved by promoting climate protection projects, such as forest conservation and agricultural projects.

CO2 certificates are allocated to companies by governments and are at the heart of the fight against climate change. In order to guarantee the quality and integrity of the certificates, minimum prices are set so that only an increase in the price is possible. In addition, there are monitored standards and verification procedures by independent institutions. Today, CO2 certificates are also traded via various institutions as well as on exchanges. The polluter pays principle applies. Anyone who emits greenhouse gases that are harmful to the climate in excess of the permitted amount must purchase emission rights in the form of CO2 certificates.

The number of permits or certificates is based on the total greenhouse gas emissions in regular operation.

Emissions trading takes place in the regulated market. This means that a CO2 certificate acquired in emissions trading entitles a company to produce one tonne of carbon dioxide within a certain period. In addition, there are companies that are allowed to issue Co2 certificates through Co2 binding.

To illustrate this, a presentation by the Federal Environment Agency from 2004.

<figure><img src="/files/ijVMyZNzHrudJD9fPiJg" alt=""><figcaption><p><strong>Fig.1 UBA2004</strong></p></figcaption></figure>


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